08 Oct 08 LPO industry attempts to generate greater awareness among buyers

The legal services offshoring industry in India is growing rapidly. Even as the overall BPO and knowledge services industry is growing at 30% to 35% per annum, legal services segment takes the lead and is growing at over 40% per annum.

Indian revenues from legal services offshoring were $225 m for the calendar year 2007 and are expected to reach $640 m by end 2010. This growth is primarily driven by greater acceptance and growing interest about offshoring among buyers of legal services (law firms and corporates). This was evident at a recent LPO Summit organized by the American Conference Institute (ACI) in New York. Prior to the conference, service providers such as LawScribe, Pangea3 organized a workshop in an attempt to educate and spread awareness among the buyers about the benefits of offshoring.

While several law firms were of the opinion that outsourcing within the US is a better option as compared to offshoring, there were corporates such as Sun Microsystems and Nokia who have explored the offshoring option and had positive feedback to share with the attendees. Connie Brenton, Director Legal Services, Sun Microsystems is a big supporter of legal process outsourcing. Commenting on the LPO industry, she said, “I’ve been to India a number of times, the most recent being in May this year. I had been to India in 2005 and have followed the progress of the Indian LPO market closely. During the last 6 months to 1 year, the LPO industry has exploded and I expect the industry to grow rapidly.”

Several law firms and corporates such as Baker & McKenzie, UBS and Accenture have captive centers for support and legal services. Some firms and companies are adopting the captive model as they consider it a better (and safer) alternative; however there are differing opinions on this. Karlyn Stanley, Head of Legal Services, Infosys BPO believes that, “As the needs of the companies grow bigger, the captive centers will face issues with scale, cost and speed.”

There were several discussions around the benefits of offshoring, the considerations and requirements before deciding on offshoring. Some buyers (especially law firms) are still hesitant about offshoring because they view it as a drastic change in their way of working. While offshoring does entail some changes to existing workflow processes, these changes are mostly one-time effects.

Several significant issues were brought up including ABA Ethics opinion, recent notification issued by the USPTO, what is the recourse for buyers, how service providers are addressing conflict in accounts handled, security issues, etc. Selecting an LPO service provider, structuring and negotiating the agreement, change management and the potential pitfalls where work has been outsourced were also discussed.

There was also a debate of the services that can or cannot be offshored. Most of the attendees were in agreement that process oriented and support services can be easily offshored. Jack Diggle, Consultant, PrinceOMC said that most of the law firms will take a logical approach to outsourcing, that is outsourcing of IT functions followed by BPO and core legal work. Large law firms in UK such as Clifford Chance, Eversheds, Allen & Overy and Linklaters have outsourced their IT and support functions. These firms are yet to experiment with offshoring of their core legal services.

Currently, very few law firms are convinced about offshoring, even when it comes to support and back office services. The primary concerns are about the quality, client confidentiality, data security, conflict of interest, duty of disclosure, attorney-client privilege and unauthorized practice of law.

Despite these buyer concerns, there is an increase in the amount of litigation and thereby an increasing need for services such as document review, litigation support, contract review, etc. We believe that the situation can change considerably once the acceptance of offshoring grows among the large law firms.

While the entire BPO industry is reeling under the negative impact of a recessive US economy, India-based offshore legal service providers can hope for silver linings – increased litigation cases will lead to potential business opportunities for the best equipped service providers. And what better way to create an impact, than generate offshoring awareness among the buyer community on their land!